Qinheyuan: Redefining Elderly Care

This case describes how Qinheyuan Group Co., Ltd. (hereinafter “Qinheyuan”) created shared value by solving pain points associated with traditional elderly care. In addition to providing elderly care services, Qinheyuan also sought to address the psychological needs of senior citizens—specifically, to give them a sense of self-worth by making them feel needed or able to help others. In the late 2000s, Qinheyuan pioneered an upscale, membership-based elderly care model that sought to give the elderly sufficient freedom and respect while engaging them in creating and sharing value. This model was implemented in its two retirement communities, namely Kangqiao Apartments (dubbed “Version 1.0”, with a 95% occupancy rate) and Yingfeng Apartments (“Version 2.0”, with a 90% occupancy rate).

The company’s founder Xi Zhiyong subsequently decided to develop an improved version of the company’s elderly care model (dubbed “Version 3.0”). This coincided with claims by parent company Yihua Healthcare that Qinheyuan had failed to meet its performance targets for 2019. As a result, Yihua Healthcare demanded compensation of ¥81.7 million and required Qinheyuan to ramp up efforts to market its existing apartments. Despite these pressures, Xi insisted that Qinheyuan should continue to work on its new model. Could Xi turn a blind eye to the demands of Qinheyuan’s parent company, and if not, could he find a compromise?